Individuals and businesses alike can save money on taxes in India through a variety of tax-saving programs. People and businesses can save a lot of money through these schemes, allowing them to keep more of their hard-earned money. In India, there are five ways to lower taxes:
- PPF, or Public Provident Fund,:
The PPF is an Indian government savings plan for the long term. Under Section 80C of the Income Tax Act, contributions to the PPF are eligible for a yearly tax deduction of up to INR 1.5 lakh. Additionally, the PPF provides a fixed interest rate, currently 7.1% annually.
- Employee Provident Fund (EPF):
India’s EPF is a savings plan for salaried workers. Section 80C allows for tax deductions on EPF contributions, up to a maximum of INR 1.5 lakh per year. Additionally, employers are required to contribute matching funds to the EPF.
- Equity-Linked Savings Scheme (ELSS):
A type of mutual fund known as an ELSS invests in equity and instruments related to equity. Under Section 80C, investments in ELSS are eligible for a yearly tax deduction of up to INR 1.5 lakh. Higher risk comes with higher potential returns from ELSS funds.
- NPS: The National Pension System
The Indian government offers a pension plan called the NPS. Commitments to the NPS are qualified for charge derivations under Segment 80CCD (1), up to 10 percent of the singular’s compensation (counting dearness stipend) or INR 1.5 lakh, whichever is lower.
- Interest on a Home Loan:
Under Section 24, home loan interest can be deducted from taxable income up to a maximum of INR 2 lakh per year. When it comes to repaying a home loan, this can save a lot of money.
Individuals and businesses alike stand to benefit greatly from India’s five tax-saving strategies. It’s critical to painstakingly think about the particular elements and advantages of each plan, as well as your own monetary objectives and hazard resilience, prior to going with a choice.